Wirth says physical oil shortages near, calls Hormuz disruption 1970s-scale

Chevron Chairman and CEO Mike Wirth told the Milken Institute Global Conference on Monday that physical shortages of oil are about to surface across the world, warning that “demand needs to move to meet supply” and that “economies are going to have to slow” as the closure of the Strait of Hormuz drains stocks faster than producers and traders can refill them.

It was the bluntest read from a major Western producer since the Hormuz route shut. The strait, through which roughly 20 per cent of global crude moves, has been blocked since the Iran shock began. Buffers Chevron and its peers leaned on through April are now emptying as the standoff drags on. “We will start to see physical shortages,” Wirth said on the panel, held at the Milken event in Beverly Hills.

Wirth compared the disruption to the 1970s oil crises, calling it “potentially as big as in the 1970s.” He declined to name a price target but pointed to the speed at which commercial cargoes, sanctioned shadow-fleet barrels and strategic reserves are being absorbed at once.

WTI and Brent benchmarks have settled in a band of $100 to $110 per barrel since the closure, according to Fox Business reporter Eric Revell, who interviewed Wirth on stage. The US national average gasoline price hit $4.55 per gallon on 7 May, AAA data show, up roughly 41 per cent from $3.16 a year earlier. Los Angeles pump prices are approaching $9 per gallon. Jet fuel has moved from below $2.50 to about $4 per gallon since the conflict began.

What the data show

Goldman Sachs delivered the corroborating figure on the panel. The bank told clients global oil stocks are on track to fall to 98 days of demand by end-May, a level last touched in the 2008 supply squeeze, and called the depletion speed concerning. Combined IEA member emergency reserves stand at roughly 1.2 billion barrels of public stocks plus another 600 million barrels held by industry, leaving cover thinner than headline reserve totals suggest.

Production data tell a similar story. Global oil supply fell by 10.1 million barrels per day to 97 million barrels per day in March, according to the conference panel’s data review. Inventories outside the Middle East Gulf were drawn down by 205 million barrels in the same month. China added 40 million barrels of crude to its strategic storage. The US Strategic Petroleum Reserve sat at 415 million barrels as of 27 February, and has been tapped only marginally since.

Asia carries the brunt

The geographic spread of the shortage is uneven. Asia takes the largest hit because the region depends most heavily on Middle Eastern crude. Japan sources roughly 95 per cent of its oil imports from the Persian Gulf, and refiners in South Korea and India are reworking March term lifters to add West African and US Gulf cargoes at premium rates.

Wirth flagged Europe and Australia as also exposed. He said the United States was unlikely to face outright physical shortages, owing to its domestic production base. The closer-to-home channel is already visible. The last scheduled Gulf shipment arrived at the Port of Long Beach earlier this month, Wirth said. Spirit Airlines ceased operations on 3 May after jet fuel costs surged into the $4 per gallon range.

Quentin Debuisschert, Chairman and CEO of Axens, and Fabio Fritelli, Managing Director of NEXTCHEM, joined the same panel and pointed to refiner runs as the next pressure point. Cracking margins on Middle Eastern medium sour grades have collapsed as alternate crudes flood European and Asian docks, and several mid-sized refiners are facing forced run-cuts heading into the summer driving season.

How analysts read it

The macro readout is darker. Forecasters now see a 1.5 million barrel per day drop in global oil demand in the second quarter of 2026, the kind of contraction last seen during the 2020 lockdowns. Goldman Sachs has already pushed its Fed rate-cut path to September and December, and Boston Fed President Susan Collins this week told a Bloomberg podcast audience that the conflict could keep rates elevated into 2027.

Equity reactions on Monday and Tuesday were mixed. Energy majors held up. Chevron itself was little changed. Shell, which last week posted a Q1 beat and announced a $3 billion buyback, traded sideways. Airlines, cruise operators and discount retailers led declines as the gasoline-and-jet-fuel pass-through worked through models.

What is next

Wirth declined to forecast when supplies might normalise. The answer, he said, depends on the diplomatic track and on whether Saudi Arabia and the UAE bring spare capacity online faster than has been signalled. OPEC’s June 2 meeting in Vienna is now the focus. Traders are watching for any signal of a coordinated stock release alongside production additions.

For consumers, the immediate test is the next AAA print. If the national average pushes through the June 2022 peak of $5.01 per gallon, political pressure to draw down the SPR will rise sharply, even with the reserve at its February reading. Chevron’s chief executive, sitting next to executives from Axens and NEXTCHEM, did not sugar-coat the answer. Demand, he said, is the variable that has to give.